Richard Desmond is angry. Somebody has got under his skin. And that somebody is Paul Dacre. Whatever I discuss with the owner of Channel 5 and the Daily Express, the same person, the same invective crops up. But that is hardly surprising given that the editor in chief of the Daily Mail this month condemned the fact that the multimillionaire proprietor "who'd made his money from porn" was deemed "a fit and proper person to own a newspaper" in a speech at the Leveson inquiry.

The hope had been that Desmond might be prepared to reconsider his self-imposed exclusion from the Press Complaints Commission. His Express and Star titles have stayed away since the start of the year, an absence that as the Leveson inquiry begins is seen as catastrophic for an industry fighting to preserve self-regulation. There had been a hint of détente behind the scenes– a few weeks earlier Desmond had privately responded to a commentator's argument that he ought to rejoin as giving him "food for thought". But that was before Dacre's comments.

Our conversation had started differently. Martin Hall, the chief executive of Desmond's Health Lottery – launched last month, and already the subject of complaints to the ASA, the ad watchdog, and referred to the Gambling Commission by Jeremy Hunt – is with the mogul. "We've sold 7m tickets in two weeks," says Desmond, cigar lit, "given away £1.2m in prize money, there have been five £100,000 prizes." Then he's off, calling the national lottery "a tax on the poor" and noting that "she" – Dianne Thompson, Camelot's chief executive - "earns £1.8m". Actually that was 2008; last year she made £1.4m.

Anyway, hang on, isn't his profit-making lottery a tax on the poor, giving away just the legal minimum – 20.3p a ticket – to good causes? "They [Camelot] give away 28p [per £1 ticket], it's included 6p for the Olympics, 6p for arts. I dunno about you, but I'm pissed off all that money goes to the Royal Opera House. I like rock 'n' roll, I go to the Forum, but I don't expect it to be fitted out by the taxpayer."

He wants to talk more about giving money to charity, and the conversation is in danger of becoming all too transparent. It's worth remembering that this is the Richard Desmond who made his first fortune through pornographic magazines and adult television (he still owns the Fantasy Channel); then made his second by exercising a ruthless grip on the Express and Star newspapers, cutting staff and squeezing out pay cheques of more than £50m in the middle of the last decade. But anyway, things are just about to liven up: "No other fucker is doing anything. I don't see Mr Dacre doing anything." And here we go: "He's a miserable fat git." Later he calls Dacre the "fat butcher" instead.

He criticises Dacre for being close to Gordon Brown while he was chancellor: "They were both number twos trying to be number ones." Desmond is the 100% owner of Northern & Shell, the company behind the newspapers and TV stations; to him, to be less than a proprietor is to be a lesser person. But he has to concede that the Mail is a more popular newspaper. "The Mail does sell more than the Express," he begins, but adds: "The gap between the two is narrowing. That's why he's pissed off. He's down to 1.7m copies on the newsstand Monday to Friday," which sounds about right – but this is just plain wrong: "The gap was 5:1, it's now 2:1." When Desmond bought the Express in 2000 sales were 1.04m; the Mail sold 2.4m; current sales are 1.89m for the Mail and 617,640 for the Express without bulks.

He moves on. It's wrong for Dacre to describe him as a pornographer: "In 1984 [sic] I got the rights to Penthouse; I'd already made money out of music magazines and ad sales." Then we're onto current business; turnover was £421m in 2009 (he says "£450m") and this year it will be "£750m or so" from 2010's £524m, helped by the first full year of Channel 5. Last year, C5, before Big Brother, contributed £130m for six months, so again the projected figure looks wrong although C5 has been growing. A year after that he hopes turnover could be £1bn, adding: "What do we borrow? Fuck all." Indeed: net debt was a mere £4.1m on the last set of public accounts.

Buying, acquiring: it looks like Desmond can do it all – pre-tax profits last year were £30.3m. He turns 60, or as he quips turns 40, this year (a party in Billingsgate is planned), but now has a seven-month-old daughter, Angel, with his girlfriend, Joy Canfield. Yet, if he has renewed energy, this is not the moment for world domination. He insists he is no longer after the Sun, for which he bid £1bn in 2009. "I'm not interested. The whole group [News International] is tarnished," he says, referring to phone hacking, although you can't help thinking Desmond may just be biding his time.

He says he is not in an acquisitive mood, adding that he has spent £100m on C5 and is making further investments in the Health Lottery and £50m on programmes such as Dallas on C5, although you have to wonder how much his recent divorce cost him. It had been suggested he had to pay out £50m, although others said £400m – although there is no sign of a large payout from the Northern & Shell accounts. Ask Desmond about the split and he just repeats: "I will not talk about my divorce." He will, though, talk about his 22-year-old son Robert, just out of Cambridge after completing a degree in computer science. He hopes Robert will join the company in due course (he's currently working elsewhere, in app development) that he will "eventually" succeed him.

Personal politics

What about politics? "I'm a socialist," Desmond starts (his current wage is £50,000, he says – the days of £50m payouts behind him). So who did he vote for last time? "Cameron, because I hated Brown. Cameron's not a Tory, he's a social democrat." Desmond was at Chequers at a charitable fundraiser for the first time, one Saturday in early October, paying £25,000 for a seat at an event to benefit the likes of Mencap with "two hours of opera – I didn't even fidget". It doesn't sound like the Express or the Star, already the most rightwing of titles, will be shifting allegiance soon, although Desmond claims, not very believably, that his papers' political stances are up to their editors. A controversial Daily Star front page, with the headline "English Defence League to become a political party", was "not a flirtation, but a wake-up call", he insists, and Desmond, whose Jewishness is never far from his thinking, says it would be ridiculous for him to back far-right politics.

Nor, by the way are the papers for sale, although Barclays produced a short prospectus this year. "We took on a loan from Barclays; they asked if we would see Barclays Capital [the investment bank]. They never came back and said we've got a buyer. I wouldn't really like to sell. I've got enough money." That may well be the summary of what happened, but at the time the noises were decidedly more mixed: the sense that most people had was that if enough cash was offered, then Desmond might just accept. Anyway, it seems nobody did.

Time, then, to approach the PCC question. Desmond is eager to give evidence to the Leveson inquiry if asked. He says he is "as sure as I can be of my audited accounts" that reporters on his newspapers didn't engage in phone hacking. "We would have seen large payments go out," points out a man whose financial discipline is legendary. So, if he's so moral, what's so bad about the PCC – why not come back? The mood switches: "I'm not sitting there with Dacre," and then: "Dacre goes out slagging me off; he can go fuck himself. I'm not worried about statutory regulation. I'm regulated by Ofcom for TV. I'm happy with that."

Really? I ask about his papers' treatment of the McCanns. What would Ofcom have made of that? His titles paid out £550,000 in 2008 to them after repeated libels in over 100 different articles. His answer is immediate: "I was delighted to pay that money. It went to help find Maddie. We took it on the chin, we paid the money, we put the apology on the front page, we didn't fight it and put the McCanns through two to three years' more grief." He believes when errors like that happen, papers should be fined. "If the money goes to charity, I'd be for that."

Desmond says he is not as short-tempered as he once was ("they call me easy Richard now") although he does say "for fuck's sake" when his PA doesn't understand him. Although the bile directed at Dacre makes that hard to believe, it eventually abates and he does say "I don't think we'll kill each other" and indicates ending his PCC exile might be possible.

At this point, it's time to be properly confused. At first he refused to consider rejoining; then he argued he'd accept statutory regulation and fines; and now he hints he'd perhaps consider returning after all. Such confusion is a common outcome of conversations with Desmond, which tend to be more about putting on a show and the emotion of the moment, rather than any particular long-term strategy.